Efficiency and Reform in the Next Parliament

The recent publication of a report by government into efficiency and reform in the next Parliament provides an overview of its proposals to transform service delivery across the public sector and presents an opportunity to reflect on the implications such initiatives are likely to have on London boroughs within the context of significant reductions in core funding. With one eye on London Councils’ continuing work to secure greater devolution for the capital, this briefing outlines the government’s thinking and highlights the issues for boroughs.

Overview

On 3 December 2014, HM Treasury and the Cabinet Office published a report titled Efficiency and Reform in the next Parliament. This set out the government’s ambition to save £10 billion for 2017-18 and £15-20 billion for 2019-20 and proposed that these savings will be achieved through: improved procurement for common goods and services; a continued process of asset rationalisation; a focus on reducing fraud and debt; and, an accelerated shift towards the use of digital technology.

Subsequently, on the 18 December, the Department for Communities and Local Government released the provisional local government finance settlement for 2015/16. London Councils’ recent estimate, drawing on this data, is that between 2010 and 2016, borough’s core funding will have fallen in real terms by 45 per cent.

Against this stark financial background, this briefing provides an overview of the government’s thinking on efficiency and reform in the next Parliament, considers the potential opportunities for London arising from these proposals and reflects on the alignment between nationally led proposals for service transformation alongside growing calls for greater devolution to councils.

Analysis

At the heart of the government’s proposals for improving efficiency within the public sector is an accelerated shift towards the use of digital technology. Essentially, the government’s aspiration is to make dealing with the public sector online as easy and efficient as the best services offered by the private sector. By 2020 the government aims to provide a series of cross-departmental digital platforms covering services such as payments, messaging and appointments booking, supported by shared programmes to keep information secure, provide postcode look-ups and supply location data.

To this end, the government intends to:

- Increase digital uptake of government public services by 10 per cent by mid-2016, and bring average digital uptake to 90 per cent among those who are online by 2020.
- Make it easier to make payments to government online, especially from a mobile phone or device, with a new common payments platform introduced from 2016 and eventually offered to the wider public sector.
- Ensure that every new digital service is available via an open Application Programme Interface (API) as well as a web browser to encourage private sector innovation.
- Nominate a Government Chief Data Officer to define data standards for the public sector.
- Accelerate the move of existing IT services into the Cloud using suppliers sourced through the ‘G-Cloud’ procurement framework and the Crown Hosting Service to reduce costs and keep information secure.

The government will continue with its process of asset rationalisation, by accelerating its programme of moving to Civil Service hubs, reducing office space per FTE to an average of eight square metres by 31 March 2018 and announcing that it expects a further £5 to 6 billion of receipts from property sales by 2020.

Following the introduction of a ‘Right to Contest’ the public can now challenge the government’s use of land and property. If a challenge is successful a Department must release the asset for sale. The government’s intention is to work towards the extension of this approach across the wider public sector.

The government also intends to improve its procurement processes. It currently spends over £40 billion on goods and services per year and its aim is to transition up to £10 billion of annual spend on common goods and services from Departments to the Crown Commercial Service by 2019-20. An ambition is to further expand the work of the Crown Commercial Service into the wider public sector, to support the NHS, local authorities, schools and the police to maximise their buying leverage. Part of this approach will be a focus on data transparency to build a culture of “comply or explain”.

In advance of the introduction of Universal Credit, the DWP and HM Revenue and Customs will look to see how they can reduce fraud and error in the legacy benefits system. This will be facilitated through the use of Real Time Information systems about individuals’ employment and earnings. To tackle uncollected debt, the government will introduce a Debt Market Integrator to enable debt collection through a single, co-ordinated private sector approach.

Finally, the government has proposed to continue exploring whether it is best placed to deliver public services in-house. This will potentially mean opening up the public sector in areas ranging from operational delivery to ‘back office’ services, with the ambition to save costs, improve quality and redesign services around users. This may mean the expansion of alternative delivery models such as joint ventures and mutuals, particularly across the local government sector.

The future policy direction suggested by this report presents a number of opportunities for London local government to advance and engage with the government’s efficiency and reform agenda. For a start, the use of digital technology in the delivery of public services continues to be an area of significant opportunity. Adopting strategies employed by market leading software companies – Amazon, Google, Microsoft and Facebook – the shift towards ‘Government as a Platform’ has the potential to radically transform public service delivery and improve the relationship between provision and public use.

As providers and commissioners of public services, as producers of service information and as local centres of expertise and data analysis there may be a case to be made for London local government to develop a shared public service platform distinct from the GLA, but aligned with best practice developed at a city-wide and national level.

Asset rationalisation also continues to offer the opportunity for London boroughs to reduce overheads and generate capital receipts. More ambitiously it creates a potential role where borough chief executives might lead local asset rationalisation schemes across the whole public sector within their borough’s boundaries.

The use of real-time information in tackling fraud and reducing outstanding debt has the potential to support borough resilience. Access to this information could be secured if not already available and the potential to establish an integrated debt collection service for all the London boroughs could be explored.

Efforts to improve shared procurement across London are already in place and will no doubt continue to be developed. It might be useful to explore potential synergies with the government’s approach and the opportunity on offer from developing a pan-London purchasing platform for common items.

**Commentary**

The government’s efficiency and reform agenda presents a broad picture of a leaner, smarter and more effective public sector. The push to make better use of digital technology, alongside common sense approaches to asset rationalisation and joint procurement chime with thinking that has proved to be increasingly popular in recent years. However, while the scale of the potential savings on offer through these approaches underlines the extent to which Departments stand to benefit from reform, it also contributes to the sense that Whitehall has, so far, been relatively protected from the severest cuts to budgets.

For many in local government the proposals outlined in the government’s report will be strikingly familiar. The experience of designing and delivering efficient services within the context of declining budgets and rising demand has encouraged most if not all to explore the potential savings to be gained through such approaches. Some may even welcome the government’s steps to bring Departmental practice more closely into line with the performance of local councils, who are widely recognised as one of the most efficient parts of the public sector. Others are likely to feel frustrated and concerned by the apparent focus on ‘quick wins’ at a time of unprecedented financial challenge.

In areas such as digital technology, procurement and asset rationalisation, there is already the sense that some London boroughs are ahead of the government. These areas have delivered savings, particularly in central services, but they stand in the face of rising demand for statutory services such as those for vulnerable adults and children that have cost implications which run to the billions.

Ultimately therefore, while the government’s focus on increasing the efficiency of Whitehall is to be welcomed, public service reform through devolution to local councils remains the missing piece of the puzzle. Unfortunately, it seems that on this side of the general election at least, Ministers remain cautious about trusting local leaders with further devolution. With manifestos due to be published shortly, it will interesting to see which of the national parties recognises the advantages of acting radically by devolving to reform.

Author: Philip Clifford, Policy and Project Manager (T: 020 7934 9792) Click here to send a comment or query to the author

Links:

Efficiency and reform in the next Parliament (policy paper)

This member briefing has been circulated to: Portfolio holders and those members who requested policy briefings in the following categories: Leadership, devolution and democracy